In its recent decision, Becerra v. San Carlos Apache, No. 23-250, the U.S. Supreme Court ruled the Indian Self Determination and Education Assistance Act (ISDEAA), 25 U.S.C. § 5301 et seq., requires the Indian Health Service (IHS) to cover certain costs incurred by tribes and ISDEAA tribal entities that operate healthcare facilitates.

Under the ISDEAA, tribes and tribal entities may enter into self-determination contracts, sometimes called “638 contracts” or “477 compacts,” with the IHS to provide healthcare services to their members. Under the ISDEAA, the IHS is required to provide money to fulfill the requirements of the self-determination contracts that tribes take on. The act requires the IHS to provide money for “direct program expenses for the operation of the Federal program” as well as “any additional administrative or . . . overhead expense incurred by the tribe in connection with the operation of the Federal program, function, service, or activity pursuant to the contract.” 25 U.S.C. § 5235(a)(3)(A).

Tribes and tribal entities engaged in IHS-funded health care will often bill third parties, Medicare, Medicaid, or private insurance for those health care costs, just like non-tribal healthcare providers. Under IHS rules, however, the payments from those third-party sources can only be used to further achieve the purposes of the self-determination contract. Those restrictions imposed additional compliance and other costs on tribes—Contract-Support-Costs—because they had to segregate funds and take other administrative actions to ensure compliance with the IHS’s restrictions on the use of the funds.

The IHS refused to provide tribes with additional funds to reimburse them for the Contract-Support-Costs incurred in connection with the spending and collecting of third-party revenue.

In response, the San Carlos Apache and Northern Arapaho Tribes filed lawsuits against the IHS for failing to provide money to cover the Contract-Support-Costs, particularly the cost of collecting the third-party revenue.

The Supreme Court upheld lower court decisions that found in favor of the tribes. Simply put, the Court held the IHS must cover those costs that are “directly attributable” to a tribe when it carries out its self-determination contract. Because Contract-Support-Costs are incurred by the tribes as the result of the self-determination contract, they are directly attributable to it; thus, the IHS must provide additional funds to tribes to cover the Contract-Support-Costs. The Supreme Court explained:

Contract support costs are necessary to prevent a funding gap between tribes and IHS. By definition, these are costs that IHS does not incur when it provides healthcare services funded by congressional appropriations and third-party income. §§5325(a)(2)(A) and (B). But they are costs that tribes must bear when they provide, on their own, healthcare services funded by the Secretarial amount and program income. If IHS does not cover costs to support a tribe’s expenditure of program income, the tribe would have to divert some program income to pay such costs, or it would have to pay them out of its own pocket. Either way, the tribe would face a systemic funding shortfall relative to IHS—a penalty for pursuing self-determination.

The self-determination contracts of the San Carlos Apache Tribe and Northern Arapaho Tribe require them to collect and spend program income to further the functions, services, activities, and programs transferred to them from IHS. When the Tribes do so and incur administrative costs, [ISDEAA] requires IHS to pay those support costs

            As a result of this ruling, tribes are entitled to repayment of Contract-Support-Costs incurred over the last six years. In a June 13, 2024, “Dear Tribal Leader” letter, the IHS stated that it “is preparing to implement the decision and pay [Contract-Support-Costs] on eligible expenditures of third-party reimbursements.” The letter also stated:

[IHS] will convene [a Contract-Support-Costs] Advisory Group in July 2024 to have some initial dialogue with tribes on methodology. Once the recommended methodology is established, our plan is to engage in full Tribal Consultation by August 2024 to collect tribal feedback and recommendations to ensure that we are able to modify our current processes to implement the decision.”

Id. A supplement enclosed with the letter described the process for obtaining repayment of past Contract-Support-Costs. It states:

Claims that are not submitted in writing to the awarding official within 6 years of accrual are barred by the statute of limitations and will be denied in the ordinary course. See 41 U.S.C. § 7103(a)(4)(A). Therefore, for example, claims attributable to contracts with a performance period ending in fiscal year (FY) or calendar year (CY) 2017 or earlier are now barred and will be denied. Claims within the statute of limitations that exceed $100,000 annually must be accompanied by a certification of accuracy and good faith. If a certification is not provided, the IHS will issue a rejection of the defective claim(s). Both Title I and Title V [Tribal health programs] must submit their claims to the appropriate awarding official. See 41 U.S.C. § 7103; 25 C.F.R. § 900.219. Only claims properly presented to the appropriate IHS awarding official will be considered.

With these requirements and guidelines in mind, it will be worthwhile for tribes and ISDEAA Tribal entities to consider how they wish to pursue their claims.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.

We also acknowledge the contributions of Sam Schimmel, one of our 2024 Summer Associates, in the development and drafting of this article.